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Insurer Survey Report

With various groups looking to advance frameworks for net-zero insurance metrics, attention is now on how insurers can drive positive change with a commercial, real-world benefit, as opposed to restricting appetite and applying exclusions.

Climate and sustainability is well embedded within insurers’ underwriting frameworks

The insights gleaned from the 2024 Marsh Climate and Sustainability survey reflect a continued shift in attitudes towards climate and sustainability among insurance carriers. For the third consecutive year, Marsh surveyed a group of insurers from across the Lloyd’s, London, Europe, and global markets to understand how climate and sustainability factors are affecting their underwriting decisions and future strategies.

This year, we see a refocus away from the broad themes of environmental, social, and governance (ESG)-led decisions, towards one more generally focused on climate. More specifically, we see a focus on decarbonization and the transition to net zero, as these themes rise to the top of stakeholders' agendas.

^{Figure 1}

Climate and sustainability frameworks are becoming increasingly embedded within insurers’ underwriting frameworks

Q. To what extent does your organization have a Climate and Sustainability underwriting framework in place?

A comparison of survey insights year on year shows a clear trajectory of insurers implementing climate and sustainability focused frameworks into their underwriting since 2022 (see Figure 1). The proportion of insurers who confirmed they had a framework in place has grown by 120% over the three years.

This trend means that within 12 months over 90% of the global insurers surveyed will have a climate and sustainability underwriting framework in place.

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Energy considerations continue to lead in climate and sustainability considerations for underwriters

Q. To what extent do you have Sustainability underwriting frameworks in place across specific product lines?

Many insurers are implementing plans into underwriting using a line-specific approach. As in previous years, energy was given the most attention, followed by construction (see Figure 2).

The prevalence of frameworks in the energy and construction lines reflects insurers’ focus on carbon intensive industries, which also tend to have further impacts on nature and biodiversity.

Notably, although the extent of implementation varies, climate and sustainability frameworks are present across 80% of product lines. Moreover, most lines of business have seen at least double the amount of sustainability influence on underwriting practices since last year.

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Top-down pressures from the reinsurance industry are spurring insurers’ push for decarbonization

Q. To what extent do your reinsurers scrutinize the emissions intensity of your underwriting portfolio?

Insurers have seen a jump in the scrutiny of their portfolio emissions by their reinsurers (see Figure 3).

Nearly two thirds (64%) of respondents confirmed that their portfolio emissions intensity has been analyzed, up from only 28% last year. This scrutiny is not necessarily translating into a material impact on insurers’ policies yet, but we can expect that this increased focus will lead to greater reporting requirements and, potentially, strong frameworks in the coming years.

A small number of insurers are already monitoring clients’ emissions data, although we are told that they are not yet utilizing the data they are collecting. Further insights are also available on the types of emissions data insurers are collecting year by year (e.g. which emissions).

Insureds would do well to differentiate themselves by being proactive. This could include providing data on their emissions and reduction targets to avoid insurers using third party data or proxies with less specific data. Work closely with your broker to understand which insurers are most likely to be collecting information and what they require.

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Insurers’ focus on climate extends beyond the transition to net zero to an emphasis on adaptation and mitigation measures.

Q. Does your organization presently, or is it planning to, consider insureds’ climate adaptation & mitigation measures within its underwriting?

Climate adaptation and mitigation measures can affect underwriting outcomes, with nearly 3/4^ths actively considering clients’ climate adaptation and mitigation practices in their underwriting process.

The clear prioritization of clients’ climate adaptation and mitigation measures indicates a positive shift towards a more sustainable and resilient market.

Be prepared, and talk to Marsh for support

The results show that insureds should give due consideration to climate and sustainability in their risk presentations to underwriters. Work with your Marsh advisor to:

Be proactive and consider sharing decarbonization plans with insurers now and avoid having to be reactive once insurers’ requirements become more significant.
Understand specific risk appetites and data requirements of different insurers.
Review your exposures to climate physical risks and prepare a suitable adaptation plan to include in risk presentations, your Marsh team can help with this.
Engage in discussion with insurers to demonstrate how your risk management can help ensure the ongoing physical resilience of your portfolio.

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Report

Insurer Survey Report

Climate and sustainability is well embedded within insurers’ underwriting frameworks

Climate and sustainability frameworks are becoming increasingly embedded within insurers’ underwriting frameworks

Energy considerations continue to lead in climate and sustainability considerations for underwriters

Top-down pressures from the reinsurance industry are spurring insurers’ push for decarbonization

Insurers’ focus on climate extends beyond the transition to net zero to an emphasis on adaptation and mitigation measures.

Be prepared, and talk to Marsh for support

Related insights

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Central themes for COP29 and their implications for the insurance sector

The Azerbaijan water scarcity crisis

Risk in Context Podcast: Collaboration critical to resolve climate-related systemic risks

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Insurer Survey Report

Climate and sustainability is well embedded within insurers’ underwriting frameworks

Climate and sustainability frameworks are becoming increasingly embedded within insurers’ underwriting frameworks

Energy considerations continue to lead in climate and sustainability considerations for underwriters

Top-down pressures from the reinsurance industry are spurring insurers’ push for decarbonization

Insurers’ focus on climate extends beyond the transition to net zero to an emphasis on adaptation and mitigation measures.

Be prepared, and talk to Marsh for support

Related insights

Navigating Waterways: Climate Change Implications for the Maritime Sector

Central themes for COP29 and their implications for the insurance sector

The Azerbaijan water scarcity crisis

Risk in Context Podcast: Collaboration critical to resolve climate-related systemic risks